Stocks rose as a surge in Treasury yields took a breather, with investors awaiting to hear from a slew of Federal Reserve speakers. A dollar gauge climbed to another record, while West Texas Intermediate crude slumped below $85 a barrel.
(Bloomberg) — Stocks rose as a surge in Treasury yields took a breather, with investors awaiting to hear from a slew of Federal Reserve speakers. A dollar gauge climbed to another record, while West Texas Intermediate crude slumped below $85 a barrel.
The S&P 500 rebounded from the lowest since mid-July, while the tech-heavy Nasdaq 100 outperformed. The Japanese yen dropped to a fresh 24-year low, South Korea’s won sank to levels not seen since 2009, while China’s yuan was within a whisker of cracking the psychological 7 barrier. The greenback’s dominance drove gold near the “danger zone” of $1,700 per ounce.
Bets on another 75 basis points Fed interest-rate hike to tackle high inflation recently spurred a selloff in Treasuries, with traders bracing for a European Central Bank rates decision due on Thursday, with the potential for a similar-size move. Aside from tightening monetary settings and an apparently unstoppable dollar, markets are also contending with a debilitating energy crisis in Europe and Covid lockdowns in China.
European policymakers are pulling together proposals to bring to a meeting of energy ministers in Brussels on Friday where emergency interventions will be hammered out to address the region’s energy crisis. European natural gas prices dropped.
In the UK, borrowing costs are set to tumble by the most since the 2016 Brexit referendum after Bank of England officials said the government’s proposed energy-price cap may curb soaring inflation, potentially reducing the urgency of interest-rate hikes.
With global stocks on pace for their worst run since the European debt crisis a decade ago, Goldman Sachs Group Inc. strategists are among those warning that more selling is possible. The MSCI All Country World Index is in its longest losing stretch since 2011 and rapidly erasing the latest bounce that a Goldman team led by Peter Oppenheimer described as a “bear market rally.”
“We expect further weakness and bumpy markets before a decisive trough is established,” the strategists wrote.
What to watch this week:
- European Central Bank rate decision, Thursday
- Fed Chair Jerome Powell due to speak, Thursday
- Chicago Fed President Charles Evans and his Minneapolis counterpart Neel Kashkari due to speak, Thursday
- EU energy ministers extraordinary meeting on emergency intervention in electricity markets, Friday
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Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.3% as of 9:39 a.m. New York time
- The Nasdaq 100 rose 0.7%
- The Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 fell 0.7%
- The MSCI World index fell 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro rose 0.1% to $0.9918
- The British pound fell 0.6% to $1.1450
- The Japanese yen fell 1.4% to 144.74 per dollar
Bonds
- The yield on 10-year Treasuries declined six basis points to 3.29%
- Germany’s 10-year yield declined eight basis points to 1.56%
- Britain’s 10-year yield declined nine basis points to 3.01%
Commodities
- West Texas Intermediate crude fell 3.9% to $83.46 a barrel
- Gold futures were little changed
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